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The Business of Hockey Discuss the financial and business aspects of the NHL. Topics may include the CBA, work stoppages, broadcast contracts, franchise sales, NHL revenues, relocation and expansion.

Part X: Phoenix Coyotes - Between Scylla and Charybdis

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Old
08-07-2010, 10:53 AM
  #676
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How does this work? Is the $25m on top of the NHL's $170m asking price?

Realistically, I can see how it would add up to nearly $200m. The NHL paid $140m-ish to get the team out of bankruptcy. They lost about $2-3m per month last year, so let's just say $25m (up to $165m now); CoG would want their $25m back, bringing us to $190m.

Also, the NHL is trying to get additional money out of Moyes through their personal suit, $60-70m.
I am not sure if it would be added to the purchase price, or part of the lease agreement. But Glendale city administrators and councilors have been adamant that Glendale will not have to pay any of that $25 million; it will be the responsibility of the new owners. So, if they accrue $12 million in costs through December 31st, then the new owners will presumably have to come up with an additional $12 million. If this drags out through the entire season and the operating losses are $25 million, then the cost for the new owners would increase by that amount. Unless, of course, Glendale city officials were not telling the truth to their citizens about this fund.

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08-07-2010, 10:55 AM
  #677
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Not worth it if we have to keep the team in Phoenix.
I agree, we'll just have to hold a board meeting and decide, judging by the ammount of support that they (the team staying in CoG) have on these boards, I'm sure we can scare up a few extra votes in favour of relocation.

Now just to decide where to move them?

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08-07-2010, 11:07 AM
  #678
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Another chapter begins as Federal prosecutors Friday charged Corey Noel Johnston, a financier with ties to Arizona trucking and sports magnate Jerry Moyes, with bilking banks out of nearly $80 million through an elaborate pyramid scheme.
Here we go. The worm starts to turn. This could get ugly.

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08-07-2010, 11:37 AM
  #679
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He wasnt really paying that price anyway. $103M with the balance coming through the CFD. And thanks on the Avatar change. LOL...
Yes I believe that's it. The other 65 Million was to be payed by the COG to the NHL over the next 3 years but I never understood how that was going to work because I didn't think the NHL was into taking payments for teams.

Plus there were quite a few reports saying Reinsdorf wasn't sure he was going to pay more that 65 million himself but I couldn't see the NHL selling the team for 130 Million just because it's Reinsdorf.

One other thing about the COG. If they think that they're going to cover 25 Million this coming season and have that returned through a sale they are friggen insane. There is no way in a million years that this will happen. Nobody is going to pay them that on top of the 160 or now we here 170 Million that the NHL wants.

I do not see any option but one for the COG and that is to sign Reinsdorf deal now before the season starts because once they start paying the losses I think they are screwed. Atleast now they could put that 25 Million towards helping the new owner but no way they can pay that towards the losses plus plus plus.

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08-07-2010, 11:42 AM
  #680
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I am not sure if it would be added to the purchase price, or part of the lease agreement. But Glendale city administrators and councilors have been adamant that Glendale will not have to pay any of that $25 million; it will be the responsibility of the new owners.
With three weeks to go until the invoices start piling up, and no local sale in sight, that seems completely impossible unless Winnipeg is already signed sealed & delivered.

And I wouldn't be surprised if the relo deal is in fact done - the Coyotes are sitting at cap-floor and still haven't even bothered to sign a complete roster.

 
Old
08-07-2010, 11:46 AM
  #681
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A couple of things...

First, the City of Glendale has continued to maintain that none of that $25 million will be spent. They have insisted that it will be replenished by the new owners. So, it suggests that they do not want to use these funds for political reasons, they don't really have the "parking considerations" available, or they are concerned with the legality of subsidizing the Coyotes' owners. In any case, I don't think that Glendale feels that they are in the position to put the $25 million "on the table" for Reinsdorf or anyone else.

I think the reason that the Reinsdorf deal fell apart is that they realized that they probably couldn't put together enough CFD revenue to meet the needs. Remember, in the first three years they need to generate up to almost $47 annually to contribute to Reinsdorf's purchase of the team ($65 million total), and fund the operating loss reserve account (up to $25 million per year). This would not just depend on agreements from the City of Glendale, but also on Westgate business owners that seem to have some financial distress just now. Perhaps the problem has been that Glendale was not able to convince the Westgate business owners that the amounts that they would have to contribute to the CFD were achievable and financially worthwhile.
Whilleee i think the $25 million was needed for the CoG to stay at the poker table so to speak....the CoG gambled they could get a deal done before the beginning of the season and when and if that doesn't happen they can kiss the $25 million goodbye.....the price tag at $165 is already away too high and the additional burden of $25 million on this deal "to stay in Glendale" would make it impossible if it already isn't.......IMHO

now if a deal is cut by December would a new owner take over then and start eating losses therefore getting the CoG off the hook for the last half of the year.....maybe but most likely not......i see any new deal getting done close to the deadline absorbing that fund directly or indirectly

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08-07-2010, 11:56 AM
  #682
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now if a deal is cut by December would a new owner take over then and start eating losses therefore getting the CoG off the hook for the last half of the year.....maybe but most likely not......i see any new deal getting done close to the deadline absorbing that fund directly or indirectly
It was my understanding that the 25 mil would not be used if the team was sold prior to a specific date (can't recall what it was). After 1 Sep 10 - the COG would have to start paying for operating losses. So I would think that if the team is sold prior to 31 Dec 10, COG would only have to pay for the losses up until the team was sold.

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08-07-2010, 12:08 PM
  #683
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Yes I believe that's it. The other 65 Million was to be payed by the COG to the NHL over the next 3 years but I never understood how that was going to work because I didn't think the NHL was into taking payments for teams.

Plus there were quite a few reports saying Reinsdorf wasn't sure he was going to pay more that 65 million himself but I couldn't see the NHL selling the team for 130 Million just because it's Reinsdorf.

One other thing about the COG. If they think that they're going to cover 25 Million this coming season and have that returned through a sale they are friggen insane. There is no way in a million years that this will happen. Nobody is going to pay them that on top of the 160 or now we here 170 Million that the NHL wants.

I do not see any option but one for the COG and that is to sign Reinsdorf deal now before the season starts because once they start paying the losses I think they are screwed. Atleast now they could put that 25 Million towards helping the new owner but no way they can pay that towards the losses plus plus plus.
I think that if the NHL now dropped the purchase price just for Reinsdorf, it would open an whole can of worms. Wouldn't IEH and other prospective owners then come back and demand the same consideration? Wouldn't Glendale then want them to drop the price even lower so that they could get a better lease deal? I think that there is every indication that the selling price will remain firm. Beyond everything else, it would be a ludicrous precedent to have the NHL purchase teams, then sell them at a discount just to keep them in tenuous markets. I can't see it happening.

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08-07-2010, 12:13 PM
  #684
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Whilleee i think the $25 million was needed for the CoG to stay at the poker table so to speak....the CoG gambled they could get a deal done before the beginning of the season and when and if that doesn't happen they can kiss the $25 million goodbye.....the price tag at $165 is already away too high and the additional burden of $25 million on this deal "to stay in Glendale" would make it impossible if it already isn't.......IMHO

now if a deal is cut by December would a new owner take over then and start eating losses therefore getting the CoG off the hook for the last half of the year.....maybe but most likely not......i see any new deal getting done close to the deadline absorbing that fund directly or indirectly
The Glendale mayor and politicians have a responsibility to the citizens of Glendale, and an interest in their own jobs. I think it would be perilous for them to go back on their word on this. What it means is that I think they need to get a deal done by August of September.

I am not sure what they will do if they are not able to find a buyer to keep the team in Glendale and assume the losses this year. It would be interesting to see how they would react if TNSE stepped in an offered an extra $25 million to "ease their pain".

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08-07-2010, 12:28 PM
  #685
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The Glendale mayor and politicians have a responsibility to the citizens of Glendale, and an interest in their own jobs. I think it would be perilous for them to go back on their word on this. What it means is that I think they need to get a deal done by August of September.

I am not sure what they will do if they are not able to find a buyer to keep the team in Glendale and assume the losses this year. It would be interesting to see how they would react if TNSE stepped in an offered an extra $25 million to "ease their pain".
I agree Whileee. If a deal is going to get done, it is going to get done in the next couple of weeks. I believe that to be a more realistic deadline for the City then December 31. Unless of course, the $25 million gets rolled into the CFD...

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08-07-2010, 12:47 PM
  #686
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I agree Whileee. If a deal is going to get done, it is going to get done in the next couple of weeks. I believe that to be a more realistic deadline for the City then December 31. Unless of course, the $25 million gets rolled into the CFD...
Hard to imagine how the CFD could add another $25 million in short-term obligations. I think that all indications suggest that even meeting Reinsdorf's deal might be too high a bar for the CFD. Otherwise, why would they have bothered shutting out Reinsdorf earlier this summer to fiddle around with IEH when Reinsdorf offers a much more certain path to a successful sale with the NHL?

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08-07-2010, 01:40 PM
  #687
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Why would they have bothered shutting out Reinsdorf earlier this summer to fiddle around with IEH when Reinsdorf offers a much more certain path to a successful sale with the NHL?
We dont know & may never know whether Glendale or Reinsdorf pulled the chute Whilee. IMO, it was JR, not the COG. Couldve' been over the $65M combined with a reluctance on the part of Ellman to enjoin with the CFD, any number of factors. Glendale was more than familiar with IE & its' difficulties; no, if they have been "fiddling" as you speculate, it may be a cover for subterranean negotiations or discussions with 1 or 2 other parties. "Never say never", but I have a hard time believing Reinsdorf would be revisiting unless theres' been some sort of deeper fundamental change to the arena bond issues, change in the NHL's latitude with respect to pricing & or terms, a blockbuster TV deal thats being kept under wraps, whatever....

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08-07-2010, 02:04 PM
  #688
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We dont know & may never know whether Glendale or Reinsdorf pulled the chute Whilee. IMO, it was JR, not the COG. Couldve' been over the $65M combined with a reluctance on the part of Ellman to enjoin with the CFD, any number of factors. Glendale was more than familiar with IE & its' difficulties; no, if they have been "fiddling" as you speculate, it may be a cover for subterranean negotiations or discussions with 1 or 2 other parties. "Never say never", but I have a hard time believing Reinsdorf would be revisiting unless theres' been some sort of deeper fundamental change to the arena bond issues, change in the NHL's latitude with respect to pricing & or terms, a blockbuster TV deal thats being kept under wraps, whatever....
You might be right, Killion, in which case things are a bit bleaker for the Coyotes' future. If it was simply a matter of Glendale trying to get a better deal from IEH, and having failed to work that out now going back to Reinsdorf, then things might move ahead. If Reinsdorf actually wants a better deal, then it will put an even more enormous burden on Glendale and the Westgate businesses.

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08-07-2010, 02:05 PM
  #689
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Here we go. The worm starts to turn. This could get ugly.
Hypothetically, if Moyes is involved and involved the Yotes franchise as part of his dealing, what reprecussions could there be, if any? Or is the team pretty much isolated from any real harm here?

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You might be right, Killion, in which case things are a bit bleaker for the Coyotes' future. If it was simply a matter of Glendale trying to get a better deal from IEH, and having failed to work that out now going back to Reinsdorf, then things might move ahead. If Reinsdorf actually wants a better deal, then it will put an even more enormous burden on Glendale and the Westgate businesses.
I read this as JR saying to CoG "How badly do you want to keep the team in Phoenix?" If he comes back his leverage would be considerable-that's why I wonder if JR (and whoever else'the "mystery buyers" (I think of The Great Cow race when I read that "The Mystery Cow!") is pretty much letting CoG sweat on this-he or someone else could have a sweetheart deal....

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08-07-2010, 03:08 PM
  #690
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We dont know & may never know whether Glendale or Reinsdorf pulled the chute Whilee. IMO, it was JR, not the COG. Couldve' been over the $65M combined with a reluctance on the part of Ellman to enjoin with the CFD, any number of factors. Glendale was more than familiar with IE & its' difficulties; no, if they have been "fiddling" as you speculate, it may be a cover for subterranean negotiations or discussions with 1 or 2 other parties. "Never say never", but I have a hard time believing Reinsdorf would be revisiting unless theres' been some sort of deeper fundamental change to the arena bond issues, change in the NHL's latitude with respect to pricing & or terms, a blockbuster TV deal thats being kept under wraps, whatever....
Both sides share some responsibility, but it was much more CoG pulling the plug on JR than JR walking away.

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08-07-2010, 03:20 PM
  #691
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Hypothetically, if Moyes is involved and involved the Yotes franchise as part of his dealing, what reprecussions could there be, if any? Or is the team pretty much isolated from any real harm here?

I read this as JR saying to CoG "How badly do you want to keep the team in Phoenix?" If he comes back his leverage would be considerable-that's why I wonder if JR (and whoever else'the "mystery buyers" (I think of The Great Cow race when I read that "The Mystery Cow!") is pretty much letting CoG sweat on this-he or someone else could have a sweetheart deal....
Even if, hypothetically, Moyes was fully involved in the dealings' of his "associate" & benefitted directly or indirectly, gets charged, convicted & imprisoned, it would in no way affect the Coyotes. If he still owned the team, it certainly would, and be cause for tremendous concern.

As for JR somehow procuring additional leverage by bowing out & then re-entering?. I dont think so. His MOU was maxed, what more could he possibly want?. As it sat, it may very well have breached the very tenets' of "fair dealing" upon which commercial transactions & law's are based, not to mention the constitutional issues pursuant to the Gift Clause's in Arizona & specifically the $65M COG/CFD contribution towards the purchase price of the team. Goldwater was positively slathering at the mouth over that beauty.

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08-07-2010, 03:20 PM
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Question. If Reinsdorf is back in the game, is it as if he never dropped out and has to honor his original agreement
, or could he trash the original agreement, and start all over?

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08-07-2010, 03:26 PM
  #693
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Both sides share some responsibility, but it was much more CoG pulling the plug on JR than JR walking away.
What leads you to make that assumption?.

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08-07-2010, 03:27 PM
  #694
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Both sides share some responsibility, but it was much more CoG pulling the plug on JR than JR walking away.
Do you have something on this that you can share? I'm not doubting you, I'm just curious about any details on the matter.

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08-07-2010, 03:39 PM
  #695
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Question. If Reinsdorf is back in the game, is it as if he never dropped out and has to honor his original agreement or could he trash the original agreement, and start all over?
His MOU was what it was & if he did re-enter it'd be identical. Something beyond it's terms caused him to bow out, and I dont think it was the COG telling him to do so.


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08-07-2010, 03:49 PM
  #696
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His MOU was what it was & if he did re-enter it'd be identical. Something beyond it's terms caused him to bow out, and I dont think it was the COG telling him to do so.

Killion, I tend to agree. I think that both he and Glendale realized that the CFD mechanism was not going to work out. But that is just speculation. I can't think of another reason for him to walk away, or for Glendale to want him to.

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08-07-2010, 04:26 PM
  #697
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this is interesting.

If you want a good summary of what Jerry Reinsdorf was asking for, take a look at this article from ESPN's Lester Munson

http://sports.espn.go.com/espn/comme...=munson/100506

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And that isn't all that Glendale is doing for Reinsdorf. The MOU includes six concessions from the city that some team owners wouldn't even dare to request:

• Total debt-free control of the Jobing.com Arena with a subsidy from Glendale;

A city guarantee of up to $100 million in operating losses for a team that has lost $300 million since it moved to Arizona from Winnipeg in 1996;

• A promise from Glendale to use its bonding power to gather the funds for the purchase price and the operating-loss guarantee;

• A limit of five years on a promise to keep the team in Glendale;

• The right to sell the team in five years if it is not profitable;

• A guarantee that Reinsdorf will recapture his $103 million share of the purchase price in any sale.


Last edited by LadyStanley: 08-07-2010 at 05:09 PM. Reason: copyright
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08-07-2010, 04:57 PM
  #698
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As this gets closer to the deadline, I'm sure COG gets more nervous.

How far do you think the COG will go to secure the yotes? What is the most they will give up to keep the team?

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08-07-2010, 05:39 PM
  #699
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If you want a good summary of what Jerry Reinsdorf was asking for, take a look at this article from ESPN's Lester Munson
Ya, that was a well written article by Munson that was discussed here at length some months back. It still takes your breath away looking through the rearview.

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08-07-2010, 06:23 PM
  #700
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If you want a good summary of what Jerry Reinsdorf was asking for, take a look at this article from ESPN's Lester Munson
Hell, I could get financing under those terms. Who do I call to throw my hat in the ring?

 
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